Magnetic holes are sudden changes in the magnetic field intensity |B| from typical interplanetary values (~10 nT) to less than 1 nT in a matter of seconds. The intensity then recovers within seconds or up to ~30 min later. These |B| dropouts can be seen daily. Less often observed, but even more dramatic, are magnetic field depletions that last for up to several hours. We use selected periods of magnetic flux dropouts observed with various sensors of the Advanced Composition Explorer (ACE), which has a unique combination of magnetic field, plasma, and composition experiments, to establish the origin of these peculiar objects. We conclude that these microscale magnetic holes very likely develop in the heliosphere and are not of direct solar origin. We also suggest a possible formation mechanism associated with magnetic reconnection close to the Sun. ¿ 2001 American Geophysical Union